-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DklmjJygSPvXYuihKLXGhdyGQ4w+wGcS7pUAgeORgeOMB7n86Yw+I3Yd7uMd+yEF IdzpRC2nIkv6RyyoF1ndAQ== 0000950123-01-002251.txt : 20010314 0000950123-01-002251.hdr.sgml : 20010314 ACCESSION NUMBER: 0000950123-01-002251 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20010313 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COVISTA COMMUNICATIONS INC CENTRAL INDEX KEY: 0000034497 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 221656895 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-11039 FILM NUMBER: 1567336 BUSINESS ADDRESS: STREET 1: 150 CLOVE RD CITY: LITTLE FALLS STATE: NJ ZIP: 07424 BUSINESS PHONE: 9738121100 MAIL ADDRESS: STREET 1: 150 CLOVE ROAD CITY: LITTLE FALLS STATE: NJ ZIP: 07424 FORMER COMPANY: FORMER CONFORMED NAME: TOTAL TEL USA COMMUNICATIONS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FARADYNE ELECTRONICS CORP DATE OF NAME CHANGE: 19920223 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BURNS DONALD A CENTRAL INDEX KEY: 0001135000 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 450 ROYALE PALM WAY STREET 2: SUITE 450 CITY: PALM BEACH STATE: FL ZIP: 33480 BUSINESS PHONE: 5616557550 MAIL ADDRESS: STREET 1: 450 ROYALE PALM WAY STREET 2: SUITE 450 CITY: PALM BEACH STATE: FL ZIP: 33480 SC 13D/A 1 y46415bsc13da.txt AMENDMENT NO. 1 TO SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1)* Covista Communications, Inc. (f/k/a Total Tel USA Communications, Inc.) (Name of Issuer) Common Stock ($.05 par value) (Title of Class of Securities) 89151T 10-6 (CUSIP Number) Robert F. Quaintance, Jr. Debevoise & Plimpton 875 Third Avenue New York, NY 10022 (212) 909-6000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 5, 2001 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Section 240.13d-1(e), (f) or (g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See Section 240.13d-7(b) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 6 2 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Donald A. Burns 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. 7 SOLE VOTING POWER 0 NUMBER OF SHARES BENEFICIALLY 8 SHARED VOTING POWER 1,883,261 OWNED BY EACH REPORTING 9 SOLE DISPOSITIVE POWER 0 PERSON WITH 10 SHARED DISPOSITIVE POWER 1,883,261 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,883,261 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 23.66% 14 TYPE OF REPORTING PERSON IN Page 2 of 6 3 Statement on Schedule 13D This Amendment No. 1 to Schedule 13D filed by Donald A. Burns, a natural person and U.S. citizen ("Mr. Burns"), with respect to the common stock, par value $.05 per share (the "Common Stock"), of Covista Communications, Inc. (f/k/a Total Tel USA Communications, Inc.), a corporation organized under the laws of the State of New Jersey (the "Issuer"), supplements and amends the Schedule 13D previously filed with the Securities and Exchange Commission by Donald A. Burns on February 15, 2001 (the "Schedule 13D"). All capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Schedule 13D. Item 3. Source and Amount of Funds or Other Consideration. Item 3 is amended by adding the following paragraph at the end of such Item: Page 3 of 6 4 As of March 1, 2001, Mr. Burns and Mr. Anderson, Gold & Appel and Revision entered into a letter agreement (the "Letter Agreement") pursuant to which they agreed to amend and restate the Note and the Amended Stock Pledge Agreement. In accordance therewith, as of March 1, 2001, Mr. Anderson, Gold & Appel and Revision delivered to Mr. Burns an Amended and Restated Promissory Note evidencing borrowings (including accrued interest through such date) in the aggregate amount of $14,310,400 and amending the terms of payment under the Note (the "Amended Note"). In addition, as of March 1, 2001, the Amended Stock Pledge Agreement was further amended pursuant to an Amended and Restated Pledge Agreement by and among Gold & Appel, Revision, FINDS, Entree International Limited ("Entree"), Mr. Anderson and Mr. Burns (the "New Pledge Agreement"). Pursuant to the New Pledge Agreement, certain terms of the Amended Stock Pledge Agreement were amended and additional collateral was pledged to Mr. Burns. Each of the Letter Agreement, the Amended Note and the New Pledge Agreement was entered into on March 5, 2001 but was effective as of March 1, 2001. As a result of the transactions entered into as of March 1, 2001, the Event of Default referenced in the preceding paragraph has been deemed cured. Item 4. Purpose of Transaction. Item 4 is amended in its entirety as follows: The Pledged Covista Shares were pledged to Mr. Burns as security for the loan described in Item 3. Mr. Burns has no plans or proposals with respect to any of the matters set forth in paragraphs (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. Item 5, paragraphs (a), (b) and (c), are amended in their entirety as follows: (a) Upon the occurrence and continuation of an Event of Default under the New Pledge Agreement, Mr. Burns may be deemed the indirect beneficial owner of 1,883,261 shares of Common Stock, constituting 23.66% of the outstanding shares of Issuer's Common Stock (computed on the basis of 7,960,571 shares of Common Stock currently outstanding as reported in the Issuer's Form 10Q, filed with the Securities and Exchange Commission on December 15, 2000). (b) Upon an Event of Default and an exercise of remedies under the New Pledge Agreement, Mr. Burns may be deemed to have sole voting and dispositive power with respect to the 1,883,261 shares of Issuer's Common Stock. Upon an Event of Default but prior to such an exercise of remedies, Mr. Burns may be deemed to Page 4 of 6 5 share voting and dispositive power with respect to such shares with Revision (as to 1,179,732 of such shares) and with FINDS (as to 703,529 of such shares). See Item 3 above and Item 6 below. Mr. Burns has no basis for providing the information required by Item 2 with respect to Revision and FINDS, beyond that information which is available in Schedule 13D filings by Revision and FINDS made with respect to the Issuer or Capsule. (c) On March 1, 2001, as a result of the transactions described in the last paragraph of Item 3 above, the existing Event of Default described in Item 3 above was deemed cured. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. Item 6 is amended in its entirety as follows: Pursuant to the New Pledge Agreement, the Pledgors granted Mr. Burns a lien upon and security interest in, among other things, the Pledged Shares. According to the terms of the New Pledge Agreement, in the event of an Event of Default, among other things, (a) no Pledgor may exercise any voting or other consensual rights with respect to the Pledged Shares without the prior written consent of the Pledgee; (b) the right, if any, of any Pledgor to receive cash dividends in respect of the Pledged Shares shall cease and all such dividends shall be payable directly to the Pledgee; and (c) if the Pledgee has notified the Pledgors that it elects to exercise the Pledgee's right to exercise voting and other consensual rights with respect to the Pledged Shares, all rights of Pledgor to exercise such rights shall cease and shall become immediately vested in the Pledgor, as more specifically described in the New Pledge Agreement. See Item 3 above. Item 7. Materials to be Filed as Exhibits. Exhibit 4. Amended and Restated Promissory Note, dated as of March 1, 2001, in the principal amount of $14,310,400 made by Gold & Appel Transfer, S.A., Revision LLC and Walter C. Anderson in favor of Donald A. Burns. Exhibit 5. Amended and Restated Pledge Agreement, dated as of March 1, 2001, by and among Gold & Appel Transfer, S.A., Revision LLC, Foundation for the International Non-Governmental Development of Space, Entree International Limited and Walter C. Anderson, as Pledgors, in favor of Donald A. Burns, as Pledgee. Exhibit 6. Letter agreement, dated as of March 1, 2001, by and among Donald A. Burns, Walter C. Anderson, Gold & Appel Transfer, S.A. and Revision LLC. Page 5 of 6 6 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Amendment No. 1 to Schedule 13D with respect to the undersigned is true, complete and correct. Date: March 13, 2001 By: /s/ Donald A. Burns ---------------------------- Name: Donald A. Burns Page 6 of 6 EX-99.4 2 y46415bex99-4.txt AMENDED AND RESTATED PROMISSORY NOTE 1 Exhibit 4 AMENDED AND RESTATED PROMISSORY NOTE New York, New York March 1, 2001 $14,310,400.00 Borrowers: Gold & Appel Transfer, S.A., Revision LLC and Walter C. Anderson, jointly and severally 1. Promise to Repay; Payments of Principal and Interest. Gold & Appel Transfer, S.A., a corporation duly organized and existing under the laws of the British Virgin Islands ("Gold & Appel"), Revision LLC, a limited liability company duly organized and existing under the laws of the State of Delaware ("Revision"), and Walter C. Anderson, an individual ("Anderson") (each of "Gold & Appel," "Revision" and "Anderson" referred to herein, individually, as a "Borrower" and, collectively, as the "Borrowers"), for value received, hereby jointly and severally promise to pay to the order of Donald A. Burns (the "Lender") the principal amount of $14,310,400.00 as follows: an installment payment of $3,000,000.00 of principal shall be payable on March 31, 2001, and the balance of the principal amount, plus accrued interest on the total principal amount, shall be payable on December 31, 2001 (the "Maturity Date"). Interest (computed on the basis of a 360-day year of twelve 30-day months) shall accrue on the unpaid balance of such principal amount at the rate of 18% per annum from the date hereof, and interest on any overdue principal and (to the extent permitted by applicable law) on any overdue interest shall accrue at the rate of 20% per annum until paid, payable on demand. Payments of principal of and interest on this Note shall be made in lawful money of the United States of America at the office of the Lender, 450 Royal Palm Way, Suite 450, Palm Beach, FL 33480, or at such other office as the Lender shall have designated by written notice to the Borrowers. 2. Defined Terms. The following capitalized terms are used herein with the respective meanings set forth below: BORROWERS: has the meaning set forth in Section 1 hereof. BUSINESS DAY: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. COLLATERAL: has the meaning ascribed to such term in the Pledge Agreement. CONTRACTUAL OBLIGATIONS: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. 2 DEFAULT: any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. EVENT OF DEFAULT: any of the events specified in Section 7, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. EXCLUDED TAXES: means, with respect to the Lender, (a) income taxes imposed on (or measured by) his net income by the United States of America (or its political subdivision or taxing authority therein or thereof) and (b) any other taxes imposed as a result of the Lender's present or former connection with the jurisdiction imposing such taxes (other than a connection arising solely from the transactions contemplated hereby and by the Pledge Agreement). FINANCING LEASE: any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. GAAP: generally accepted accounting principles in the United States of America in effect from time to time. GOVERNMENTAL AUTHORITY: means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. INDEMNIFIED TAXES: Taxes other than Excluded Taxes. ISSUER: has the meaning ascribed to such term in the Pledge Agreement. LENDER: has the meaning set forth in Section 1 hereof. LIEN: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security arrangement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). LOAN: the loan made by the Lender to the Borrowers on the Original Closing Date in the aggregate principal amount of $13,000,000.00 (such amount having been 2 3 increased to $14,310,400.00 on the date hereof), the repayment and other obligations with respect to which are the subject matter of this Note. MATERIAL ADVERSE EFFECT: a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) or prospects of any Borrower and its Subsidiaries, if any, taken as a whole, or (b) the validity or enforceability of this Note or the Pledge Agreement or the rights or remedies of the Lender hereunder or thereunder. MATURITY DATE: has the meaning set forth in Section 1 hereof. ORIGINAL CLOSING DATE: means August 7, 2000. OTHER TAXES: means any and all present or future recording, stamp, documentary, excise, transfer, sale or similar taxes, charges or levies arising solely from any payment made under the Note or the Pledge Agreement or from the execution, delivery or enforcement of the Note or the Pledge Agreement. PERSON: natural persons, corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. PLEDGE AGREEMENT: that certain Amended and Restated Pledge Agreement, dated as of even date herewith, by and among Gold & Appel Transfer S.A., Revision LLC, Foundation for the International Non-governmental Development of Space and Walter C. Anderson, as pledgors, and Donald A. Burns, as pledgee, as the same may be hereafter from time to time amended, modified or supplemented. REQUIREMENTS OF LAW: as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. SUBSIDIARY: as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only be reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both by such Person. TAXES: means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. 3 4 3. Prepayments. Borrowers may prepay the principal balance due under this Note, in whole but not in part, at any time without penalty or premium, together with the interest accrued thereon to the date of such prepayment. 4. Use of Proceeds. The Borrowers have used the original proceeds derived by them from the Loan for the following purposes: (i) approximately $12 million has been used to make a loan to NETtel Communications, Inc. and (ii) approximately $1 million has been used to fund working capital needs of the Borrowers. 5. Post-Closing Conditions. The Borrowers agreed to take the following actions, or cause the Issuer or other relevant Persons to take the following actions, by no later than August 15, 2000, and the Borrowers confirm that all such actions have been taken as of the date hereof.: (a) Corporate Proceedings of Borrowers and Issuer. With respect to each Borrower that is a corporation, limited liability company or similar entity, the Lender shall be provided with a copy of the resolutions (or comparable authorizing document), in form and substance satisfactory to the Lender, of the Board of Directors (or comparable governing body) of each such Borrower authorizing and ratifying (i) the execution, delivery and performance of this Note and the Pledge Agreement and (ii) the granting by it of the Liens created pursuant to the Pledge Agreement, certified by the Secretary or an Assistant Secretary (or comparable officer) of such Borrower, which certificate shall be in form and substance reasonably satisfactory to the Lender and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and were in effect as of the Original Closing Date. With respect to the Foundation for the International Non-governmental Development of Space ("FINDS"), the Lender shall be provided with a copy of the resolutions of the Board of Directors (or comparable governing body) of FINDS authorizing and ratifying the execution, delivery and performance of the Pledge Agreement, certified by the Secretary or Assistant Secretary of FINDS, which certificate shall be in form and substance reasonably satisfactory to the Lender and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and were in effect as of the Original Closing Date. With respect to the Issuer, the Lender shall be provided with a copy of the resolutions of the Board of Directors of the Issuer authorizing and ratifying the execution, delivery and performance of the Pledge Agreement to the extent set forth in the Pledge Agreement, certified by the Secretary or Assistant Secretary of the Issuer, which certificate shall be in form and substance reasonably satisfactory to the Lender and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and were in effect as of the Original Closing Date. (b) Incumbency Certificates. The Lender shall be provided with a certificate of the Issuer and of each Borrower that is a corporation, limited liability company or similar entity as to the incumbency and signature of the officers of such Borrower or 4 5 Issuer executing the Note or the Pledge Agreement reasonably satisfactory in form and substance to the Lender, executed by the President or any Vice-President (or similar officer) and the Secretary or any Assistant Secretary (or similar officer) of such Borrower or Issuer. (c) Legal Opinions. The Lender shall be provided with legal opinions of counsel to the Borrowers and of counsel to the Issuer, each in form and substance reasonably satisfactory to the Lender. (d) Signature Guaranties. To the extent that any stock power provided to the Lender does not contain a signature guaranty at the time that it is delivered to the Lender, the Lender shall be provided with replacement stock powers containing a signature guaranteed by a participant of the Securities Transfer Agents Medallion Program or another approved signature guaranty program acceptable to the Securities and Exchange Commission, the Securities Transfer Association and the transfer agent of the Issuer. 6. Covenants of Borrowers. The Borrowers hereby agree that, so long as the Note remains outstanding and unpaid or any other amount is owing to the Lender hereunder or under the Pledge Agreement, each Borrower shall: (a) Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its material obligations of whatever nature. (b) In the case of each Borrower that is a corporation, limited liability company or other similar entity, continue to engage in business primarily of the same general types as now conducted by it, and preserve, renew and keep in full force and effect the corporate, limited liability company or other existence of such Borrower; and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business, and comply with all Contractual Obligations and Requirements of Law except to the extent that failure to maintain such rights, privileges and franchises and to comply with Contractual Obligations and Requirements of Law could not, in the aggregate, be reasonably expected to have a Material Adverse Effect. (c) Promptly give notice to the Lender of: (i) the occurrence of any Default or Event of Default; (ii) any default or event of default under any Contractual Obligation of any Borrower or any Subsidiaries of any Borrower which if not cured could reasonably be expected to have a Material Adverse Effect; (iii) any litigation, investigation or proceeding affecting any Borrower or any Subsidiaries of any Borrower (A) which is reasonably likely to involve a payment of $250,000 or more not covered by insurance, (B) in which injunctive or similar relief reasonably likely to have a Material Adverse Effect is reasonably likely to be obtained or (C) which if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse 5 6 Effect; and (iv) any development or event known to any Borrower which could reasonably be expected to have a Material Adverse Effect. (d) At any time and from time to time, upon the Lender's request and at the expense of the Borrowers, promptly and duly execute and deliver or cause to be executed and delivered any and all further instruments and documents and take such further action as the Lender may reasonably request to effect the purpose of the Pledge Agreement. 7. Events of Default and Remedies. If any of the following events shall occur and be continuing: (a) The Borrowers shall fail to pay any principal of or interest on the Note when due in accordance with the terms hereof; or the Borrowers shall fail to pay any other amount payable hereunder or under the Pledge Agreement within three Business Days after any such other amount becomes due in accordance with the terms hereof or thereof; or (b) Any representation or warranty made or deemed made by any Borrower in the Pledge Agreement or which is contained in any certificate, document or statement furnished by any Borrower under or in connection with this Note or the Pledge Agreement shall prove, either individually or in the aggregate, to have been incorrect or misleading in any material respect on or as of the date made or deemed made; or (c) Any Borrower shall default in the observance or performance of any covenant or other agreement contained in this Note or in the Pledge Agreement (including, without limitation, the satisfaction of any post-closing condition set forth in Section 5 of this Note); or (d) Any Borrower shall fail to pay any of the Secured Obligations (as defined in and set forth in the Pledge Agreement) when the same shall become due and payable; or (e) Any Borrower shall (i) default in any payment of principal of or interest on any indebtedness (other than the loan that is the subject of this Note) or in the payment of any guarantee obligation, aggregating $250,000 or more, beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such indebtedness or guarantee obligation was created; or (ii) default in the observance or performance of any other agreement or condition following any applicable grace periods relating to any indebtedness or guarantee obligation referred to in clause (i) immediately above or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of any indebtedness referred to in clause (i) immediately above or beneficiary or beneficiaries of such guarantee obligation referred to in clause (i) immediately above (or a trustee or agent on 6 7 behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice, lapse of time or both, if required, such indebtedness to become due prior to its stated maturity or such guarantee obligation to become payable, provided, however, that if the default described in this clause (e) is cured, the Event of Default under this clause (e) shall simultaneously be cured; or (f) One or more judgments or decrees shall be entered against any Borrower involving in the aggregate (for such Borrower or for all Borrowers combined) a liability (to the extent not paid or covered by insurance less any applicable and customary retention or deductible) of $250,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 30 days from the entry thereof; or (g) (i) The Pledge Agreement shall cease, for any reason, to be in full force and effect (other than pursuant to the terms hereof or thereof), or any Borrower shall so assert in writing or (ii) the Lien created by the Pledge Agreement on any material portion of the Collateral shall cease to be enforceable and of the same effect and priority purported to be created thereby and, if such condition is correctable, such condition is not corrected within 30 days; (h) (i) Any Borrower shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or any Borrower shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against any Borrower any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against any Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) any Borrower shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) any Borrower shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; 7 8 then, and in any such event the principal of, and all accrued interest on, this Note, and all other amounts owing under this Note or the Pledge Agreement, shall immediately become due and payable upon written demand of the Lender. 8. Tax Indemnification. (a) Any and all payments by or on account of any obligation of the Borrowers hereunder or under the Pledge Agreement shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if any Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions of Indemnified Taxes and Other Taxes (including deductions applicable to additional sums payable under this Section) the Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the relevant Borrower shall make such deductions and (iii) the relevant Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Borrowers shall pay any Other Taxes to the relevant governmental or taxing authority in accordance with applicable law. (c) The Borrowers hereby indemnify the Lender for the full amount of any Indemnified Taxes or Other Taxes paid by the Lender on or with respect to any payment by or on account of any obligation of the Borrowers hereunder or under the Pledge Agreement (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority, unless such penalties, interest or expenses are incurred solely as a result of any gross negligence or willful misconduct of the Lender. A certificate setting forth in reasonable detail the amount of such payment or liability and the reasonable basis of such payment or liability delivered to the Borrowers by the Lender shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Borrower to a Governmental Authority, such Borrower shall deliver to the Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Lender. 9. Governing Law. This Note shall be construed and enforced in accordance with and governed by the internal laws of the State of New York without reference to principles of conflicts of law, including all matters of construction, validity and performance. 8 9 10. Amendments, Etc. Any amendment, modification or waiver of any term or provision of this Note must be in writing and signed by the Lender. Any such waiver will be effective only in the specific instance and for the specific purpose for which it is given. 11. Successors and Assigns. All the covenants, stipulations, promises and agreements contained in this Note by or on behalf of the Borrowers shall bind their respective successors and assigns, whether so expressed or not. 12. Headings. The headings of the sections and paragraphs of this Note are for purposes of reference only and shall not limit or define the meaning hereof. 13. Submission to Jurisdiction; Waiver of Immunity; Agent for Service of Process. For the purpose of assuring that the Lender may enforce its rights under this Note, each Borrower, for itself and its successors and assigns, hereby irrevocably (a) agrees that any legal or equitable action, suit or proceeding against any Borrower arising out of or relating to this Note or any transaction contemplated hereby or the subject matter of any of the foregoing may be instituted, at the election of the Lender, in any state or federal court in the State of Virginia (including, without limitation, the U.S. Federal District Court for the Eastern District of Virginia) or in any state or federal court in the State of Florida, (b) waives any objection which it may now or hereafter have to the venue of any action, suit or proceeding, (c) irrevocably submits itself to the nonexclusive jurisdiction of any state or federal court of competent jurisdiction in the State of Virginia or the State of Florida, and (d) irrevocably waives any immunity from jurisdiction to which it might otherwise be entitled in any such action, suit or proceeding which may be instituted in any state or federal court of the State of Virginia or the State of Florida, and any immunity from the maintaining of an action against it to enforce any judgment for money obtained in any such action, suit or proceeding and, to the extent permitted by applicable law, any immunity from execution. Not later than August 15, 2000, each Borrower shall irrevocably designate and appoint CT Corporation System (or any successor corporation), at its office in Virginia and its office in Florida, as its authorized agent to accept and acknowledge on its behalf service of any and all process which may be served in any such action, suit or proceeding with respect to any matter as to which it has submitted to jurisdiction as set forth in this Section 13 and agrees that service upon such authorized agent shall be deemed in every respect service of process upon such Borrower or its successors or assigns, and, to the extent permitted by applicable law, shall be taken and held to be valid personal service upon it. Each Borrower will take all action necessary to ensure that such Borrower shall at all times have an agent for service of process for the above purposes in the State of Virginia and the State of Florida. This Section 13 does not affect the right of the Lender to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against any Borrower in any jurisdiction. 9 10 14. Notices, Etc. All notices and other communications provided for hereunder must be in writing (including telegraphic, telex, telecopy or cable communication) and must be sent (a) if to any Borrower, at its address set forth below, (b) if to Lender, at 450 Royal Palm Way, Suite 450, Palm Beach, FL 33480, Telephone: 561-655-7550, Facsimile: 561-655-9692, or (c) as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications are effective when received. The notice addresses for the respective Borrowers are as follows: (a) If to Gold & Appel: Omar Hodge Building Wickams Cay Road Town, Tortolla British Virgin Islands with copies to: Sean P. McGuinness Swidler Berlin Shereff Friedman, LLP 3000 K Street NW Washington, D.C. 20007-5116 Facsimile: 202-424-7643 and Walter C. Anderson Revision LLC 1023 31st Street, NW Suite 300 Washington, D.C. 20007 Facsimile: 202-736-5065 (b) If to Revision: Revision LLC 1023 31st Street, NW Suite 300 Washington, D.C. 20007 Attention: Walter C. Anderson Facsimile: 202-736-5065 10 11 with a copy to: Sean P. McGuinness Swidler Berlin Shereff Friedman, LLP 3000 K Street NW Washington, D.C. 20007-5116 Facsimile: 202-424-7643 (c) If to Anderson: c/o Revision LLC 1023 31st Street, NW Suite 300 Washington, D.C. 20007 Attention: Walter C. Anderson Facsimile: 202-736-5065 with a copy to: Sean P. McGuinness Swidler Berlin Shereff Friedman, LLP 3000 K Street NW Washington, D.C. 20007-5116 Facsimile: 202-424-7643 11 12 IN WITNESS WHEREOF, the Borrowers have caused this Note to be duly executed and delivered personally or by their representative officers or agents thereunto duly authorized as of the date first above written. GOLD & APPEL TRANSFER, S.A. By:/s/ Walter C. Anderson -------------------------------- Walter C. Anderson, Attorney-in-Fact REVISION LLC By:/s/ Walter C. Anderson -------------------------------- Walter C. Anderson, Manager WALTER C. ANDERSON By:/s/ Walter C. Anderson -------------------------------- Walter C. Anderson 12 EX-99.5 3 y46415bex99-5.txt AMENDED AND RESTATED PLEDGE AGREEMENT 1 Exhibit 5 AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of March 1, 2001, by and among Gold & Appel Transfer, S.A., a corporation organized and existing under the laws of the British Virgin Islands ("Gold & Appel"), Revision LLC, a limited liability company organized and existing under the laws of the State of Delaware ("Revision"), Foundation for the International Non-governmental Development of Space, a corporation organized and existing under the laws of the State of Delaware ("FINDS"), Entree International Limited, a corporation organized and existing under the laws of the State of Delaware ("Entree"), and Walter C. Anderson, an individual ("Anderson") (each of Gold & Appel, Revision, FINDS, Entree and Anderson, individually, a "Pledgor," and collectively, the "Pledgors"), and Donald A. Burns, an individual (the "Pledgee"). R E C I T A L S A. Pursuant to the Note (as defined herein), on August 7, 2001, the Pledgee loaned to Gold & Appel, Revision and Anderson (the "Borrowers") the aggregate principal amount of $13,000,000.00, which principal amount was increased to $14,310,000.00 on the date hereof. B. As a condition to the obligation of the Pledgee to make such loan, certain of the Pledgors pledged certain shares of capital stock of Covista (as defined herein) to the Pledgee as security for the performance of the obligations of the Borrowers under the Note, pursuant to that certain Stock Pledge Agreement, dated as of August 7, 2000, by and among Gold & Appel, Revision, FINDS and Anderson, as pledgors, and the Pledgee, as pledgee. On October 20, 2000, as a result of a decrease in the Market Price (as defined herein) of Covista shares, such agreement was amended and restated (as so amended and restated, the "Existing Pledge Agreement") to reflect certain amendments, including the pledge by Gold & Appel of certain shares of capital stock of Capsule (as defined herein) to the Pledgee as additional security for the performance of the obligations of the Borrowers under the Note. C. As a result of a subsequent decrease in the Market Prices of Covista and Capsule shares, and pursuant to Section 7.3 of the Existing Pledge Agreement, Gold & Appel has agreed to pledge certain shares of capital stock of Epoch to the Pledgee as additional security for the performance of the obligations of the Borrowers under the Note. In addition, Entree has agreed to become a party to this Agreement and to pledge its entire limited liability company interest in Red Tulip, LLC, a Delaware limited liability company ("Red Tulip"), to the Pledgee as additional security for the performance of the obligations of the Borrowers under the Note. D. Gold & Appel is the legal and beneficial owner of (i) 5,889,032 shares of Series A preferred stock of Epoch, (ii) 882,353 shares of Series B preferred stock of Epoch and (iii) 1,741,041 shares of common stock of Epoch, all of which it is willing to pledge to the Pledgee subject to and in accordance with the terms and conditions set forth herein. 2 E. Entree is the legal and beneficial owner of a limited liability company interest in Red Tulip (the "LLC Interest", which term shall include all of Entree's (or, if applicable, any other Pledgor's) rights in, to and under the Red Tulip Operating Agreement, as hereinafter defined) pursuant to the Operating Agreement of Red Tulip, dated as of June 20, 1999, between Entree and Junia Hissa Neiva, an individual (the "Red Tulip Operating Agreement"), which LLC Interest it is willing to pledge to the Pledgee subject to and in accordance with the terms and conditions set forth herein. NOW, THEREFORE, to induce the Pledgee to refrain from exercising the rights it may have resulting from a Default or Event of Default under the Existing Pledge Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Pledgors hereby agree with the Pledgee, and amend and restate the Existing Pledge Agreement in its entirety, as follows: SECTION 1. CERTAIN DEFINITIONS. The following capitalized terms are used herein with the respective meanings set forth below. BANKRUPTCY EVENT: shall occur when, with respect to any party, (i) such party shall commence any case, proceeding or other action (a) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (b) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or such party shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against such party any case, proceeding or other action of a nature referred to in clause (i) above which (a) results in the entry of an order for relief or any such adjudication or appointment or (b) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against such party any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) such party shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) such party shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due. BORROWERS: the meaning given in the recitals to this Agreement. CAPSULE: Capsule Communications Inc., a Delaware corporation. CAPSULE PLEDGED STOCK: the shares of common stock of Capsule constituting a portion of the Pledged Stock. 2 3 COMBINED MARKET VALUE: at any point in time, the sum of the Pledged Share Market Values for each type (as identified by the issuer and class thereof) of stock (other than the Epoch Shares or the shares of any other entity not publicly traded on a market or exchange) and previously pledged to the Pledgee by any Pledgor and held at such time by the Pledgee pursuant to such pledge. COLLATERAL: the meaning given in the first paragraph of Section 3. COVISTA: Covista Communications, Inc., a New Jersey corporation (formerly known as Total-Tel USA Communication, Inc.). COVISTA PLEDGED STOCK: the shares of common stock of Covista constituting a portion of the Pledged Stock. DEFAULT: shall have the meaning ascribed to such term in the Note. DEMANDED SHARES: the meaning given in Section 7.3. EPOCH: Epoch Networks, Inc., a California corporation. EPOCH SHAREHOLDERS' AGREEMENT: the Third Amended and Restated Shareholders' Agreement, dated July 18, 2000, by and among Epoch, certain individuals, partnerships, corporations and other entities listed on Schedule I to such agreement, certain holders of shares of Series A and Series B preferred stock of Epoch, and Scott D. Purcell. EPOCH SHARES: a total of (i) 5,889,032 shares of Series A preferred stock of Epoch, (ii) 882,353 shares of Series B preferred stock of Epoch and (iii) 1,741,041 shares of common stock of Epoch, owned of record and beneficially by one or more of the Pledgors, as more specifically set forth on Exhibit A attached hereto. EPOCH STOCK VALUE: $25,537,278.00, until such time as Epoch has a Bankruptcy Event, at which time the Epoch Stock Value shall immediately, without any further action by any of the parties hereto, be deemed zero. EVENT OF DEFAULT: shall have the meaning ascribed to such term in the Note. EXISTING PLEDGE AGREEMENT: the meaning given in the recitals to this Agreement. EXISTING PLEDGED SHARES: a total of 1,883,261 Shares of Covista, owned of record and beneficially by one or more of the Pledgors, as more specifically set forth on Exhibit A attached hereto. LIEN: shall have the meaning ascribed to such term in the Note. LLC INTEREST: the meaning given in the recitals to this Agreement. 3 4 LLC INTEREST VALUE: $4,400,000, until such time as the Pledgee no longer has a valid perfected first priority security interest in the LLC Interest, at which time the LLC Interest Value shall immediately, without any further action by any of the parties hereto, be deemed zero. MARKET PRICE: at any point in time, the last reported sale price of the shares of common stock of Covista, Capsule or another entity, as applicable, on The Nasdaq Stock Market (or other market or exchange on which such securities are traded) on the preceding business day or, if there were no reported sales of such shares on The Nasdaq Stock Market (or such other market or exchange) on the immediately preceding business day, on the most recent business day on which there were such sales. MERGER AGREEMENT: the meaning given in Section 6.8(a). NEWLY PLEDGED SHARES: a total of 5,671,300 Shares of Capsule, owned of record and beneficially by one or more of the Pledgors, as more specifically set forth on Exhibit A attached hereto. NOTE: the Promissory Note, dated August 7, 2000, entered into by Gold & Appel, Revision and Anderson, jointly and severally, in favor of Pledgee, as amended and restated as of March 1, 2001, and as the same may be hereafter from time to time amended, modified or supplemented. PERSON: natural persons, corporations, limited partnerships, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. PLEDGED SHARE MARKET VALUE: at any point in time, with respect to a particular type (as identified by the issuer and class thereof) of stock previously pledged to the Pledgee, the product of (i) the total number of shares of such stock previously pledged to the Pledgee pursuant to this Agreement and held at such time by the Pledgee pursuant to such pledge and (ii) the Market Price of such stock, provided that, with respect to the Epoch Shares, in the aggregate, the Pledged Share Market Value shall be the Epoch Stock Value and, with respect to any other shares of stock pledged pursuant to Section 7.3 of this Agreement that are not publicly traded on a market or exchange, the Pledged Share Market Value shall be the value agreed upon in writing by the Pledgee, the relevant Pledgor and (if other than the Pledgor) Anderson. PLEDGED STOCK: the Shares and all other securities constituting part of the Collateral and any securities issued or issuable with respect to the Pledged Stock by way of dividend, stock split, conversion, exchange, in a merger, recapitalization, consolidation, contribution or otherwise. PRIVATE COMPANY STOCK VALUE: the sum of the Epoch Stock Value plus the value, as agreed in writing between the Pledgee, the relevant Pledgor and (if other than the Pledgor) Anderson, of any shares of stock of an entity (other than Epoch) not publicly 4 5 traded on a market or exchange, which shares have been pledged after the date hereof by one or more of the Pledgors to Pledgee in accordance with Section 7.3 hereof, if any. PROPOSED MERGER TRANSACTION: the proposed transaction between Startec, a subsidiary of Startec and Capsule, pursuant to which Capsule would become a wholly owned subsidiary of Startec and all outstanding capital stock of Capsule would be exchanged for shares Startec Stock. RED TULIP: the meaning given in the recitals to this Agreement. RED TULIP OPERATING AGREEMENT: the meaning given in the recitals to this Agreement. SECURED OBLIGATIONS: the meaning given in Section 2. SEC: the meaning given in Section 6.7. SECURITIES ACT: the meaning given in Section 6.7. SHARES: (i)1,883,261 shares of common stock of Covista, par value $0.05 per share, owned of record and beneficially by one or more of the Pledgors, (ii) 5,671,300 shares of common stock of Capsule, par value $0.001 per share, owned of record and beneficially by one or more of the Pledgors, and (iii) (a) 5,889,032 shares of Series A preferred stock of Epoch, par value $0.001 per share, (b) 882,353 shares of Series B preferred stock of Epoch, par value $0.001 per share, and (c) 1,741,041 shares of common stock of Epoch, par value $0.001 per share, all owned of record and beneficially by one or more of the Pledgors, in each case as more specifically identified on Exhibit A attached hereto. In addition, the term "Shares" shall include any Demanded Shares and any securities issued or issuable with respect to the Shares or Demanded Shares by way of dividend, stock split, conversion, exchange, in a merger, recapitalization, consolidation, contribution or otherwise (including, without limitation, all shares of Startec Stock issued in exchange for shares of Capsule Pledged Stock). SPECIFIED RELEASE CERTIFICATES: the meaning given in Section 7.5. STARTEC: Startec Global Communications Corporation, a Delaware corporation. STARTEC STOCK: shares of common stock of Startec, par value $0.01 per share. STOCK RESTRICTION AGREEMENTS: the meaning given in Section 6.8(c). UCC: the Uniform Commercial Code as in effect in the State of New York or in any other appropriate jurisdiction. SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement is entered into: 5 6 (a) to secure the full and timely payment by Pledgors of (i) all amounts the payment of which is required by Pledgors under the Note, including, without limitation, the principal of and interest on the Note (including, without limitation, interest accruing after the date of any filing by any Pledgor of any petition in bankruptcy or the commencement of any bankruptcy, insolvency or similar proceeding with respect to any Pledgor) as and when the same become due and payable in accordance with the terms thereof, whether at maturity or by prepayment, acceleration, declaration of default or otherwise, and (ii) all other indebtedness and other amounts payable by the Pledgors hereunder or under the Note, and (b) to secure the due and punctual performance by Pledgors of (i) all obligations of the Pledgors under the Note and (ii) all other obligations of Pledgors hereunder. (all of the payment and performance obligations referred to in this Section 2 being referred to collectively as the "Secured Obligations"). SECTION 3. PLEDGE OF SHARES, ETC. As security for the prompt payment and performance of the Secured Obligations when due (whether at stated maturity, by acceleration or otherwise), each of the Pledgors hereby conveys, assigns, grants, hypothecates, mortgages, pledges, transfers and delivers to the Pledgee a lien and charge upon, and a security interest in, all the following property, whether now owned by such Pledgor or hereafter acquired by such Pledgor and whether now or in the future existing and wherever located (collectively, the "Collateral"): (a) the Shares; (b) all right, title and interest in the LLC Interest; (c) all dividends, instruments, cash and other property or rights of any kind at any time received, receivable or otherwise distributed or distributable with respect to any of the foregoing; (d) all certificates or other writings representing or evidencing any of the foregoing; (e) all proceeds of any of the property described in clauses (a) through (d) above; and (f) all books, correspondence, credit files, electronic data, records, invoices and other papers and documents relating to any of the foregoing. 6 7 SECTION 4. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents and warrants to the Pledgee, as of the date of this Agreement and at the time of each pledge of Shares pursuant to this Agreement, as follows: (a) With respect to each of the Shares, including, without limitation, each of the Existing Pledged Shares, Newly Pledged Shares, Epoch Shares and any other Demanded Shares, Gold & Appel or Revision or FINDS is (or, at the time of the pledge of such Shares to the Pledgee, will be) the record and beneficial owner of such Shares, free and clear of any Lien except for the Lien created by this Agreement (or by the Existing Pledge Agreement). Entree has good and marketable title to the LLC Interest, free and clear of any Lien except for the Lien created by this Agreement. No effective financing statement or other instrument of similar effect covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of the Pledgee relating to this Agreement. (b) The Shares have been duly and validly issued and are fully paid and nonassessable. (c) Upon (i) delivery to the Pledgee of the certificates evidencing the Epoch Shares and, if applicable, any other Demanded Shares or any other additional Shares delivered to the Pledgee pursuant hereto, and (ii) the filing of financing statements relating to the LLC Interest on Form UCC-1 with the appropriate filing offices in Washington, D.C. and the states of Delaware and Virginia, naming Entree as debtor and the Pledgee as secured party, the security interest granted pursuant to this Agreement will constitute a valid perfected first priority security interest in such Shares or LLC Interest, as the case may be, enforceable as such against all creditors of each Pledgor and any Persons purporting to purchase any of such Shares or LLC Interest, as the case may be, from any Pledgor. The security interest granted pursuant to this Agreement constitutes a valid perfected first priority security interest in the Existing Pledged Shares and the Newly Pledged Shares, enforceable as such against all creditors of each Pledgor and any Persons purporting to purchase any of such Shares from any Pledgor. (d) Gold & Appel is a corporation duly organized, validly existing and in good standing under the laws of the British Virgin Islands and has all requisite corporate power and authority to enter into and carry out the terms of this Agreement and the Note. Revision is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited liability company power and authority to enter into and carry out the terms of this Agreement and the Note. FINDS is a not-for-profit corporation duly organized, 7 8 validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to enter into and carry out the terms of this Agreement. Entree is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to enter into and carry out the terms of this Agreement. (e) The execution, delivery and performance of this Agreement and the Note will not result in any violation of or be in conflict with or constitute a default under any term of any Pledgor's certificate of incorporation or by-laws (or similar constitutive documents) or any agreement or instrument to which any Pledgor is a party or by which any Pledgor is bound or any term of any applicable law, ordinance, rule or regulation of any governmental authority or any term of any applicable order, judgment or decree of any court, arbitrator or governmental authority. (f) No consent, approval or authorization of, or declaration or filing with, any governmental authority or regulatory body is required for the valid execution, delivery and performance of this Agreement and the Note. (g) This Agreement and the Note have been duly authorized, executed and delivered by each Pledgor and constitute each Pledgor's legal, valid and binding obligation, enforceable against such Pledgor in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws of general application relating to or affecting the rights and remedies of creditors, and by general equitable principles. SECTION 5. VOTING RIGHTS, DIVIDENDS AND OTHER DISTRIBUTIONS, ETC. 5.1 Prior to Default or Event of Default. So long as no Default or Event of Default has occurred and is continuing, Pledgors will remain entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Stock and the LLC Interest, as the case may be, and to receive and use cash dividends or distributions, in either case for any purpose not inconsistent with the terms of this Agreement or the Note. 5.2 After Default or Event of Default. For so long as a Default or an Event of Default is continuing, (i) no Pledgor may exercise any voting or other consensual rights pertaining to the Pledged Stock or the LLC Interest without the prior written consent of the Pledgee, (ii) the right, if any, of any Pledgor to receive cash dividends in respect of the Pledged Stock or distributions in respect of the LLC Interest will cease and all such dividends or distributions must be paid directly to the Pledgee (or if received by any Pledgor will be deemed held in trust by such Pledgor for the benefit of, and must be turned over immediately by such Pledgor to, the Pledgee) and thereafter will be held and disposed of by the Pledgee as part of the Collateral, and (iii) if the Pledgee has notified the Pledgors that it elects to exercise the Pledgee's right to exercise voting and other consensual rights hereunder, all rights of each Pledgor to exercise the voting and other consensual rights which such Pledgor would otherwise be entitled to exercise pursuant to Section 5.1 will cease, all such rights will thereupon become vested in the Pledgee, who 8 9 during the continuance of such Default or Event of Default will have (directly or through its nominee) the sole right to exercise such voting and other consensual rights, including, without limitation, (A) all voting, corporate, limited liability company and other rights pertaining to any of the Pledged Stock or the LLC Interest, (B) all rights to give consents, waivers and ratifications in respect thereof and (C) any and all rights of conversion, exchange, registration, subscription and any other rights, privileges or options pertaining to any of the Pledged Stock or the LLC Interest as if it were the absolute owner thereof, and in connection therewith, the right to deposit and deliver any and all of the Pledged Stock with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine, all without liability except to account for property actually received by it (each Pledgor hereby irrevocably constituting and appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with full power of substitution, to do or take any of the above actions described in the preceding clauses (A), (B) and (C). The Pledgee will have no duty to Pledgors to exercise any such right, privilege or option and will not be responsible for any failure to do so or delay in so doing. In order to permit the Pledgee to exercise the voting and other consensual rights which it may be entitled to exercise pursuant to this Section 5.2, and to receive all dividends and distributions which it may be entitled to receive under this Section 5.2, each Pledgor will, upon written notice from the Pledgee, from time to time execute and deliver to the Pledgee or other third party appropriate notices, assignments, proxies, dividend payment orders and other documents and instruments as the Pledgee may reasonably request, including but not limited to any such documents or instruments required under Section 1.4 of the Epoch Shareholders' Agreement for the effective transfer and assignment of registration rights with respect to the Epoch Shares. SECTION 6. COVENANTS OF THE PLEDGORS. 6.1 Sale of Collateral, Etc. (a) No Pledgor will (i) sell, assign, transfer, convey, or otherwise dispose of, or grant any option with respect to, any of the Collateral, or (ii) create or permit to exist any Lien upon or with respect to any of the Collateral, except for the lien and security interest created by this Agreement. (b) Without the prior written consent of the Pledgee, Entree will not, and Anderson will insure that Entree does not, do any of the following: amend, cancel, terminate or otherwise modify the Red Tulip Operating Agreement; give any consent, waiver or other approval thereunder; waive any default under or breach of the Red Tulip Operating Agreement; designate Managers (as such term is defined in the Red Tulip Operating Agreement) of Red Tulip other than Entree and Anderson; or take any other action in connection with such agreement or the LLC Interest that would materially impair the value of the interests or rights of any Pledgor thereunder or with respect thereto. (c) Notwithstanding the foregoing clause (b), Entree may, without the prior written consent of the Pledgee, cause Red Tulip to incur indebtedness and in connection with such indebtedness to cause to be executed and delivered by Red Tulip a mortgage on the real estate property owned by Red Tulip, known as 419-421 Broome Street, New 9 10 York, New York, securing such loan, provided that the proceeds from such loan are used by Red Tulip exclusively for the purpose of making improvements to such property. 6.2 Delivery of Stock Certificates, Etc. (a) Gold & Appel will immediately deliver to the Pledgee all certificates or other writings representing or evidencing any of the Epoch Shares, either in suitable form for transfer by delivery, or issued in the name of Gold & Appel and accompanied by stock powers or other appropriate instruments of transfer or assignment, duly executed by Gold & Appel in blank and undated, and in either case having attached thereto all requisite federal or state stock transfer tax stamps, all in form and substance satisfactory to the Pledgee. Each of the Pledgors will immediately deliver to the Pledgee all certificates or other writings representing or evidencing any other "securities" or "instruments" (as such terms are defined in the UCC) included in the Collateral at any time acquired or received by any Pledgor, directly or indirectly (including, without limitation, certificates representing the shares of Startec Stock that are issued in exchange for shares of Capsule Pledged Stock), either in suitable form for transfer by delivery, or issued in the name of a Pledgor and accompanied by stock powers or other appropriate instruments of transfer or assignment, duly executed by the relevant Pledgor in blank and undated, and in either case having attached thereto all requisite federal or state stock transfer tax stamps, all in form and substance satisfactory to the Pledgee. (b) Each Pledgor authorizes the Pledgee to file, in the Pledgee's discretion and at such Pledgor's expense, in jurisdictions where this authorization will be given effect, financing statements and continuation statements covering the Collateral signed only by the Pledgee, and hereby appoints the Pledgee as such Pledgor's attorney-in-fact to sign and file any such financing statements, continuation statements and any other filings or recordations covering the Collateral of such Pledgor. Such Pledgor shall, at its expense, execute, deliver, file and record any such documents, assignments, agreements, or statements (including, without limitation, financing and continuation statements under the UCC) and take any other action that from time to time may be necessary or desirable, or that the Pledgee may request, in order to create, preserve, perfect, confirm or validate the security interests granted hereunder or to enable the Pledgee to obtain the full benefits of, or to enforce its rights, powers and remedies under, this Agreement. (c) Within 10 business days after the date of a demand by the Pledgee for Demanded Shares, the Pledgors will deliver to the Pledgee all certificates or other writings representing or evidencing such Demanded Shares, either in suitable form for transfer by delivery, or issued in the name of a Pledgor and accompanied by stock powers or other appropriate instruments of transfer or assignment, duly executed by the relevant Pledgor in blank and undated, and in either case having attached thereto all requisite federal or state stock transfer tax stamps, all in form and substance satisfactory to the Pledgee. 6.3 Other Distributions. Except for cash dividends or distributions, as the case may be, permitted to be paid to Pledgors pursuant to Section 5.1, Pledgors will cause all dividends and distributions of any kind on the Pledged Stock or the LLC Interest (including any sums paid upon or in respect of the Pledged Stock or the LLC Interest 10 11 upon the liquidation or dissolution of Covista, Capsule, Startec or Red Tulip, as the case may be, or upon the recapitalization or reclassification of the capital of Covista, Capsule, Startec or Red Tulip, as the case may be, or upon the reorganization of Covista, Capsule, Startec or Red Tulip, as the case may be) to be paid directly to the Pledgee (and if any such dividends or distributions are received by any Pledgor, such Pledgor will hold them in trust for the benefit of, and will immediately turn them over to, the Pledgee) and the Pledgee will hold and dispose of all such dividends and distributions as part of the Collateral. 6.4 Records; Inspection. Each Pledgor will keep full and accurate books and records relating to the Collateral, and stamp or otherwise mark such books and records in such manner as is required in order to reflect the pledge and security interest granted pursuant hereto. Each Pledgor will permit representatives of the Pledgee at any time upon reasonable advance notice to inspect and make abstracts from its books and records pertaining to the Collateral and to discuss matters relating to the Collateral with officers of each Pledgor that is a corporation or other entity and with each Pledgor that is an individual. 6.5 Costs, Expenses and Certain Taxes. Pledgors (a) will pay to the Pledgee from time to time on demand any and all costs and expenses, including reasonable attorneys' fees and expenses, paid or incurred by or on behalf of the Pledgee in connection with this Agreement, the Existing Pledge Agreement or the Note or in connection with any modification, amendment, alteration or enforcement of this Agreement, the Existing Pledge Agreement or the Note or the collection of any amount payable by any Pledgor hereunder or under the Existing Pledge Agreement or the Note, whether or not any legal proceeding is commenced hereunder or thereunder and whether or not any Default or Event of Default has occurred and is continuing, and (b) will jointly and severally indemnify the Pledgee on demand against any loss, liability or expense incurred by the Pledgee (other than any such loss, liability or expense directly attributable to gross negligence or willful misconduct of the Pledgee) arising out of or in connection with any action or omission of the Pledgee hereunder or under the Existing Pledge Agreement or the Note, including the costs and expenses of defending itself against any claim or liability (including any claim by any Pledgor) in connection with the exercise or performance of any of its powers or duties hereunder or thereunder. All amounts payable to the Pledgee under this Section accrue interest until paid in full at the rate of 18% per annum, from the date of demand therefor. All such amounts shall constitute additional indebtedness of the Pledgors secured hereunder and shall be payable on demand. Pledgors will also pay, and will hold the Pledgee harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamps, excise, sales or other taxes or assessments which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement or the Existing Pledge Agreement or the Note. All expenses incident to the Pledgors' and Covista's performance of or compliance with Section 6.7, and all expenses incident to the Pledgors' and Capsule's performance of or compliance with Section 6.8, including, without limitation, all registration and filing fees, all fees and expenses of complying with securities or blue sky laws, National Association of Securities Dealers' fees, all printing expenses, the fees and disbursements of counsel for 11 12 the Covista or Capsule and of their respective independent public accountants, and the expenses of any special audits made by such accountants required by or incident to such performance and compliance, shall be paid by the Pledgors; provided, however, that Covista agrees that it will complete the registrations, qualifications and compliance required pursuant to Section 6.7 even if it does not receive payment or reimbursement of such expenses from the Pledgors and Capsule agrees that, if registration of Capsule Pledged Stock is required pursuant to this Agreement, it will complete the registrations, qualifications and compliance required pursuant to Section 6.8(a) even if it does not receive payment or reimbursement of such expenses from the Pledgors. 6.6 Priority of Security Interest; Further Assurances. (a) Each Pledgor will at all times cause the security interest granted pursuant to this Agreement to constitute a valid perfected first priority security interest in the Collateral, enforceable as such against all creditors of such Pledgor and any Persons purporting to purchase any Collateral from such Pledgor. (b) Each Pledgor will at any time and from time to time, at its own expense, promptly execute and deliver all further instruments and documents, and take all further actions, as may be necessary or desirable, or that the Pledgee may reasonably request, in order to (i) grant more effectively a security interest in favor of the Pledgee in all or any portion of the Collateral, (ii) maintain, preserve, or perfect the security interest and lien created or purported to be created by this Agreement and the first priority status of such security interest and lien, (iii) preserve and defend against any Person such Pledgor's title to the Collateral and the rights purported to be granted therein by this Agreement, (iv) enable the Pledgee to exercise and enforce its rights and remedies hereunder, or (v) carry out more effectively the purposes of this Agreement. If the issuer of Pledged Stock is incorporated in a jurisdiction which does not permit the use of certificates to evidence equity ownership of such Pledged Stock or permit a lien in favor of the Pledgee to be perfected by the possession by the Pledgee of the certificates representing such Pledged Stock, then the Pledgors will to the extent permitted by applicable law, record such lien on the stock register of such issuer, execute any customary stock pledge forms or other documents necessary to create, evidence or provide for the perfection of such lien and give the Pledgee the right to transfer such Pledged Stock under the terms hereof and provide to the Pledgee an opinion of counsel of such jurisdiction, in form and substance satisfactory to it, confirming the effectiveness, perfection and priority of such lien. 6.7 Registration of Covista Pledged Stock. Pledgors, as soon as practicable and at their sole cost and expense, will procure (and Covista agrees) that registration and other qualification of the Covista Pledged Stock under Federal and state securities laws shall be effected by Covista (and kept continuously effective in compliance with such laws for up to one year after the Maturity Date as set forth in the Note) so as to permit or facilitate the sale and distribution of such securities, including, without limitation, "shelf" registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"), appropriate qualifications under applicable "blue sky" or other state securities laws and appropriate compliance with any other governmental requirements. The Pledgors (and Covista) shall ensure that such registration is declared effective under the Securities Act 12 13 and all other such qualifications and compliance are completed prior to the Maturity Date as set forth in the Note. Pledgors shall cause Covista to agree (and Covista agrees) to list the Covista Pledged Stock on the Nasdaq Stock Market. Pledgors will cause the Pledgee to be kept advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, will give the Pledgee, any underwriter and their counsel reasonable opportunity to review and comment on the registration statement and other documents incident thereto, to conduct due diligence on Covista and to participate in the process, will furnish to the Pledgee such number of prospectuses, preliminary prospectuses, prospectus supplements or amendments or other documents incident thereto as the Pledgee from time to time may reasonably request, and will indemnify the Pledgee and all others participating in the distribution of such securities against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to such registration or by any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except (as to the Pledgee) insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to Pledgor by the Pledgee expressly for use therein. The registration statement filed with respect to the Covista Pledged Stock and the prospectus contained therein shall cover only the Covista Pledged Stock and no other securities. The Pledgors will cause Covista (and Covista agrees) to comply with all applicable rules and regulations of the Securities and Exchange Commission (hereinafter called "SEC") or similar federal commission, and of the Nasdaq Stock Market or any other national securities exchange on which any of the Covista Pledged Stock is listed, if any, for so long as the registration is effective, to make available to its security holders, as soon as practicable, an earnings statement covering a period of at least 12 months, but not more than 18 months, beginning with the first month after the effective date of the registration statement, which earnings statement will satisfy the provisions of Section 11(a) of and Rule 158 under the Securities Act, and to make timely filing of all reports with the SEC to enable the holders of the Covista Pledged Stock, if they so elect, to utilize Rule 144 of the Securities Act in disposing of said securities. Pledgors (and Covista) agree that, at Pledgee's request, Covista shall enter into an underwriting agreement, which shall include, without limitation, indemnification and contribution provisions and a "hold-back" or "lock-up" provision covering at least 90 days and shall otherwise be in form and substance reasonably satisfactory to Pledgee, with an underwriter for the Covista Pledged Stock chosen by Pledgee in its sole discretion, and furnish or cause to be furnished to such underwriter and Pledgee a customary opinion of counsel and accountant's comfort letter. 6.8 Registration of Capsule Pledged Stock; Delivery of Certificates Representing Startec Stock Upon Consummation of Proposed Merger Transaction; Covenant Not to Sell Startec Stock. (a) The remaining provisions of this Section 6.8(a) shall apply in the event that (i) a definitive Agreement and Plan of Reorganization relating to the Proposed Merger Transaction (the "Merger Agreement") is not entered into by November 10, 2000 or (ii) the Merger Agreement terminates without the Proposed Merger Transaction having been consummated. Pledgors, as soon as 13 14 practicable and at their sole cost and expense, will procure (and Capsule agrees) that registration and other qualification of the Capsule Pledged Stock under Federal and state securities laws shall be effected by Capsule (and kept continuously effective in compliance with such laws for up to one year after the Maturity Date as set forth in the Note) so as to permit or facilitate the sale and distribution of such securities, including, without limitation, "shelf" registration under the Securities Act, appropriate qualifications under applicable "blue sky" or other state securities laws and appropriate compliance with any other governmental requirements. The Pledgors (and Capsule) shall ensure that such registration is declared effective under the Securities Act and all other such qualifications and compliance are completed prior to the Maturity Date as set forth in the Note. Pledgors shall cause Capsule to agree (and Capsule agrees) to list the Capsule Pledged Stock on the Nasdaq Stock Market. Pledgors will cause the Pledgee to be kept advised in writing as to the progress of each such registration, qualification or compliance and as to the completion thereof, will give the Pledgee, any underwriter and their counsel reasonable opportunity to review and comment on the registration statement and other documents incident thereto, to conduct due diligence on Capsule and to participate in the process, will furnish to the Pledgee such number of prospectuses, preliminary prospectuses, prospectus supplements or amendments or other documents incident thereto as the Pledgee from time to time may reasonably request, and will indemnify the Pledgee and all others participating in the distribution of such securities against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to such registration or by any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except (as to the Pledgee) insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to Pledgor by the Pledgee expressly for use therein. The registration statement filed with respect to the Capsule Pledged Stock and the prospectus contained therein shall cover only the Capsule Pledged Stock and no other securities. The Pledgors will cause Capsule (and Capsule agrees) to comply with all applicable rules and regulations of the SEC or similar federal commission, and of the Nasdaq Stock Market or any other national securities exchange on which any of the Capsule Pledged Stock is listed, if any, for so long as the registration is effective, to make available to its security holders, as soon as practicable, an earnings statement covering a period of at least 12 months, but not more than 18 months, beginning with the first month after the effective date of the registration statement, which earnings statement will satisfy the provisions of Section 11(a) of and Rule 158 under the Securities Act, and to make timely filing of all reports with the SEC to enable the holders of the Capsule Pledged Stock, if they so elect, to utilize Rule 144 of the Securities Act in disposing of said securities. Pledgors (and Capsule) agree that, at Pledgee's request, Capsule shall enter into an underwriting agreement, which shall include, without limitation, indemnification and contribution provisions and a "hold-back" or "lock-up" provision covering at least 90 days and shall otherwise be in form and substance reasonably satisfactory to Pledgee, with an underwriter for the Capsule Pledged Stock chosen by Pledgee in its sole discretion, and 14 15 furnish or cause to be furnished to such underwriter and Pledgee a customary opinion of counsel and accountant's comfort letter. (b) Upon consummation of the Proposed Merger Transaction, the Pledgors shall immediately deliver to the Pledgee all certificates or other writings representing or evidencing any shares of common stock of Startec Global Communications Corporation issued to any Pledgor in exchange for shares of capital stock of Capsule constituting Capsule Pledged Stock, either in suitable form for transfer by delivery, or issued in the name of such Pledgor and accompanied by stock powers or other appropriate instruments of transfer or assignment, duly executed by such Pledgor in blank and undated, and in either case having attached thereto all requisite federal or state stock transfer tax stamps, all in form and substance satisfactory to the Pledgee and, unless waived in writing by the Pledgee, accompanied by an opinion or opinions of counsel to the pledgor of such shares of common stock of Startec Global Communications Corporation in form and substance satisfactory to the Pledgee (which opinion shall indicate, among other things, that upon expiration of the contractual restriction imposed by the Stock Restriction Agreement and assuming compliance by the Pledgors with the covenant set forth in Section 6.8(c) of this Agreement and the existence of circumstances which permit the Pledgee to sell such shares pursuant to this Agreement, all such shares of common stock of Startec Global Communications Corporation shall be freely transferable by the Pledgee without further need for registration or qualification). (c) In the event that the Proposed Merger Transaction is consummated, the Pledgors hereby covenant and agree that Gold & Appel will not sell or otherwise transfer pursuant to Rule 144 of the Securities Act (or permit the sale or other transfer pursuant to Rule 144 of the Securities Act of) any shares of Startec Stock beneficially owned by it until the expiration of the three-month period following the expiration of the six-month restriction on sales of Startec capital stock imposed or to be imposed pursuant to the Stock Restriction Agreements entered into or to be entered into by and among Startec, Gold & Appel and FINDS (the "Stock Restriction Agreements"). 6.9 Post-Closing Conditions. The Pledgors hereby agree to take the following actions, or to cause Covista, Capsule or other relevant Persons to take the following actions, (i) with respect to Collateral pledged on or before October 20, 2000, by no later than November 17, 2000, and (ii) with respect to any Collateral (whether in the form of Demanded Shares or other Collateral) proposed to be pledged after October 20, 2000, by no later than 20 business days after the date on which such Collateral is delivered or otherwise pledged, whether by execution of a security agreement or otherwise, to Pledgee: (a) Corporate Proceedings of Pledgors, Covista and Capsule. With respect to each Pledgor that is a corporation, limited liability company or similar entity, the Pledgee shall be provided with a copy of the resolutions (or comparable authorizing document), in form and substance satisfactory to the Pledgee, of the Board of Directors (or comparable governing body) of each such Pledgor authorizing and ratifying (i) the execution, delivery and performance of the Note (if such Pledgor is a Borrower) and this Agreement and (ii) the granting by it of the Liens created pursuant to this Agreement, certified by the 15 16 Secretary or an Assistant Secretary (or comparable officer) of such Pledgor, which certificate shall be in form and substance reasonably satisfactory to the Pledgee and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and were in effect as of the date of this Agreement. With respect to each of Covista and Capsule, the Pledgee shall be provided with a copy of the resolutions of the Board of Directors of such corporation authorizing and ratifying the execution, delivery and performance of this Agreement to the extent set forth in this Agreement, certified by the Secretary or Assistant Secretary of such corporation, which certificate shall be in form and substance reasonably satisfactory to the Pledgee and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and were in effect as of the date of this Agreement. (b) Incumbency Certificates. The Pledgee shall be provided with a certificate of Covista, Capsule and each Pledgor that is a corporation, limited liability company or similar entity as to the incumbency and signature of the officers of such Pledgor or other entity executing this Agreement reasonably satisfactory in form and substance to the Pledgee, executed by the President or any Vice-President (or similar officer) and the Secretary or any Assistant Secretary (or similar officer) of such Pledgor or other entity. (c) Signature Guaranties. To the extent that any stock power provided to the Pledgee on or after the date of this Agreement does not contain a signature guaranty at the time that it is delivered to the Pledgee, the Pledgee shall be provided with replacement stock powers containing a signature guaranteed by a participant of the Securities Transfer Agents Medallion Program or another approved signature guaranty program acceptable to the Securities and Exchange Commission, the Securities Transfer Association and the transfer agent of Covista, Capsule, Epoch or any other issuer, as and if applicable. SECTION 7. RIGHTS OF THE PLEDGEE. 7.1 No Obligations or Liability to Pledgors. The rights and powers of the Pledgee hereunder are not contingent upon the pursuit by the Pledgee of any right or remedy against any Pledgor or against any other Person which may be or become liable in respect of any of the Secured Obligations or against any other collateral security or guarantee therefor or right of offset with respect thereto, but are solely to protect its interest in the Collateral. The Pledgee will not be liable for any failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so, nor is the Pledgee under any obligation to sell or otherwise dispose of any Collateral upon the request of any Pledgor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. No action or inaction on the part of the Pledgee hereunder or under the Note will release any Pledgor from any of its obligations hereunder or under the Note, or constitute an assumption of any such obligations on the part of the Pledgee, or cause the Pledgee to become subject to any obligation or liability to any Pledgor. The Pledgee has no obligation to perform any of the obligations or duties of any Pledgor as a shareholder of Covista or Capsule. 16 17 7.2 Right of Pledgee to Perform Pledgor's Covenants, Etc. If any Pledgor fails to make any payment or to perform any agreement required to be made or performed hereunder, the Pledgee may (but need not) at any time thereafter make such payment or perform such act, or otherwise cause such payment or performance. No such action will create any liability to any Pledgor on the part of the Pledgee. All amounts so paid by the Pledgee and all costs and expenses (including, without limitation, attorneys' fees and expenses) incurred by the Pledgee in any such performance shall accrue interest from the date paid or disbursed until reimbursed to the Pledgee in full by or on behalf of the Pledgors at the rate established in Section 6.5. All such amounts shall constitute additional indebtedness of the Pledgors secured hereunder and shall be payable on demand. 7.3 Right of Pledgee to Demand Additional Pledged Shares. The Pledgee shall have the right at any time, at its sole discretion, to demand by written notice to the Pledgors that the Pledgors pledge to the Pledgee additional shares of common stock of Capsule, Covista or, if the Proposed Merger Transaction has been consummated, Startec (or, subject to the approval of the Pledgee in its sole discretion, shares of stock of one or more other entities) owned of record and beneficially by one or more of the Pledgors if, at such time, the sum of (i) the Combined Market Value plus (ii) the Private Company Stock Value plus (iii) the LLC Interest Value is less than $13,000,000; provided that, for purposes of this Section 7.3, after March 31, 2001, such amount of $13,000,000.00 shall be reduced to $10,000,000.00 if by such date the Borrowers have duly made a principal payment on the Note of $3,000,000.00 to the order of the Pledgee, in accordance with the terms of the Note. The number of shares that may be demanded pursuant to the preceding sentence shall, at the time of any such demand, be a number of shares such that the sum of the preceding clauses (i), (ii) and (iii), after accounting for such additional shares, is equal to $13,000,000 or $10,000,000.00, as the case may be. All shares at any time demanded pursuant to the provisions of this Section 7.3 shall be "Demanded Shares." Unless otherwise agreed in writing by the Pledgee, all Demanded Shares, to the extent that they would not be freely transferable by the Pledgee if sold by the Pledgee in a manner consistent with the provisions of this Agreement, shall be subject to registration requirements equivalent to those set forth in Section 6.7 of this Agreement with respect to Covista Pledged Stock. The Pledgee and the Pledgors agree that, except as otherwise expressly set forth in this Agreement, Pledgee shall at no time be required to release from the pledge or return to the Pledgors any Collateral. 7.4 Release of the Pledge and Security Interest Created Hereby. Upon payment in full of the outstanding principal amount of and accrued interest on the Note in accordance with its terms and payment or satisfaction of all other Secured Obligations, the Pledgee will, upon the written request of all Pledgors, return to the Pledgors all Collateral held by the Pledgee. Upon such payment or satisfaction, Pledgee will execute and deliver to the Pledgors such documents as the Pledgors may reasonably request to evidence the payment or satisfaction of the Secured Obligations or the release of the Collateral, as the case may be. 7.5 Partial Release of Pledged Shares Under Certain Circumstances. In the event that the sum of (i) the Combined Market Value plus (ii) the LLC Interest Value 17 18 exceeds $15,000,000, and so long as no Default or Event of Default is continuing at such time, the Pledgors, by a written request executed by each Pledgor and delivered to the Pledgee, shall have the right to request that the Pledgee release from the pledge and return to the Pledgors, at the address identified in such notice, certificates representing specified shares of Pledged Stock previously pledged to the Pledgee and held at such time by the Pledgee. Such notice shall specify certificates (the "Specified Release Certificates") representing a number of shares of Pledged Stock such that the sum of the Combined Market Value plus the LLC Interest Value, after accounting for the release of the Specified Release Certificates and calculated as of the date of such release, will equal or exceed $15,000,000; provided that, (x) for purposes of this Section 7.5, after March 31, 2001, such amount of $15,000,000.00 shall be reduced to $12,000,000.00 if by such date the Borrowers have duly made a principal payment on the Note of $3,000,000.00 to the order of the Pledgee, in accordance with the terms of the Note, (y) none of the Epoch Shares or the shares of any other entity not publicly traded on a market or exchange that have been previously pledged to the Pledgee pursuant to this Agreement and are held at such time by the Pledgee shall be eligible to be released pursuant to this Section 7.5, and (z) no shares of Covista shall be released pursuant to this Section 7.5 unless and until all shares of Capsule and all shares of any other entity (other than those entities whose shares are ineligible for release under this Section 7.5 pursuant to the preceding clause (x)) previously pledged to the Pledgee and held at such time by the Pledgee have been released. Within ten business days after its receipt of a valid notice, in accordance with this paragraph, the Pledgee shall return to the Pledgors at the address identified in such notice the Specified Release Certificates. Nothing in this paragraph shall require the Pledgee to release and return the Specified Release Certificates, or any other shares or certificates in lieu thereof, if the sum of the Combined Market Value plus the LLC Interest Value, after accounting for the release of the Specified Release Certificates and calculated as of the date of such release, would be below $15,000,000 or $12,000,000, as the case may be. SECTION 8. REMEDIES AND ENFORCEMENT. 8.1 Remedies in Case of an Event of Default. If an Event of Default has occurred and is continuing, then in addition to the actions referred to in Section 5.2 the Pledgee may take any or all of the following actions, without demand of performance or other demand, advertisement or notice of any kind to or upon Pledgors or any other Person (except as specified in Section 8.1(b)) all and each of which are hereby expressly waived by Pledgors: (a) The Pledgee may, in its own name or at its sole option in the name of any Pledgor, exercise any or all of the rights, powers and privileges of, and pursue any or all of the remedies accorded to, any Pledgor under the Collateral and may exclude such Pledgor and all Persons claiming by, through or under such Pledgor wholly or partly therefrom, including in such rights, privileges and remedies, but without limitation, all rights of such Pledgor to demand, receive, sue for, compromise and settle all payments in respect of the Collateral, and in connection therewith to exercise all rights and remedies thereunder which such Pledgor could enforce if this Agreement had not been made. 18 19 (b) The Pledgee may forthwith collect, recover, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, assign, give an option or options to purchase, contract to sell or otherwise dispose of and deliver the Collateral, or any part thereof, in one or more parcels at public or private sale or sales, at any exchange, broker's board or at any of the Pledgee's offices or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Pledgee need not make any sale of Collateral even if notice thereof has been given, may reject any and all bids that in its commercially reasonable discretion it shall deem inadequate, and may adjourn any public or private sale. Pledgors hereby acknowledge that the Collateral (other than the Epoch Shares and the LLC Interest) is of a type that could decline speedily in value and is also of a type customarily sold on a recognized market, in each case within the meaning of Section 9-504 of the UCC as in effect in any applicable jurisdiction, and that the Pledgee need not give any notice to Pledgors prior to any sale of the Collateral at any exchange, broker's board or in any other recognized market. Without limiting the foregoing, each Pledgor agrees that, with respect to any of the Collateral, the Pledgee need not give more than five days notice of the time and place of any public sale or of the time after which a private sale or other intended disposition is to take place and that such notice is reasonable notification of such matters, and waives all other demands or notices of any kind. (c) In addition to the rights described in the foregoing clauses (a) and (b), with respect to the LLC Interest, the Pledgee may (i) use, operate, store, control or manage the LLC Interest, including without limitation carrying on the business of Red Tulip and exercising all rights and powers of Entree relating to the LLC Interest, and (ii) transfer all rights in and under the Red Tulip Operating Agreement, including without limitation (but subject to the terms of the Red Tulip Operating Agreement) the right to become a substitute Member (as such term is defined in the Red Tulip Operating Agreement) of Red Tulip. At the request of the Pledgee, Entree and Anderson shall promptly execute and deliver all instruments of title and other documents as the Pledgee may deem necessary or advisable to permit the Pledgee to fully exercise its rights hereunder. (d) The Pledgee may, as a matter of right and without notice to any Pledgor or any Person claiming by, through or under any Pledgor, cause the appointment of a receiver for all or any part of the Collateral. (e) In addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to any of the Secured Obligations, the Pledgee will have and may exercise with respect to any or all of the Collateral all of the rights and remedies of a secured party under the UCC and all other legal and equitable remedies allowed under applicable law. 19 20 Each Pledgor consents to and ratifies any action which the Pledgee may take to enforce its rights under this Section 8.1. Each Pledgor waives to the full extent permitted by law the benefit of all appraisement, valuation, stay, extension, moratorium and redemption laws now or hereafter in force and all rights of marshaling in the event of the sale of the Collateral or any part thereof or any interest therein. Each Pledgor will execute and deliver such documents as the Pledgee deems advisable or necessary in order that any such sale or disposition be made in compliance with applicable law. Any sale or other disposition of the Collateral or any part thereof or interest therein in the exercise of any remedy hereunder will constitute a perpetual bar against each Pledgor and any Persons claiming by, through or under any Pledgor. Upon any such sale or other disposition, the receipt of the officer or agent making the sale or other disposition or of the Pledgee is a sufficient discharge to the purchaser for the purchase money, and such purchaser will have no duty to see to the application thereof. 8.2 Application of Proceeds Following an Event of Default. All amounts held or collected by the Pledgee as part of the Collateral (including, without limitation, all amounts realized as a result of the exercise of any rights and remedies hereunder) following the occurrence of any Event of Default will be applied forthwith by the Pledgee as follows: FIRST: to the payment of all costs and expenses of such exercise (including, without limitation, the cost of evidence of title and the costs and expenses, if any, of taking possession of, retaining custody over and preserving the Collateral or any part thereof, or any interest therein prior to such exercise), all costs and expenses of any receiver of the Collateral or any part thereof, or any interest therein, any taxes, assessments or charges with respect to any of the Collateral, whether or not prior to the lien of this Agreement, which the Pledgee may consider it necessary or desirable to pay and all amounts due and payable to the Pledgee under Section 6.5 and unpaid; SECOND: to the payment of the accrued and unpaid interest (including interest on unpaid principal and, to the extent permitted by applicable law, unpaid interest) of the Note in accordance with the provisions of the Note; THIRD: if the Note has not become due and payable in full, to the payment of all outstanding principal then due and payable on the Note; FOURTH: if the Note has become due and payable in full whether at maturity, by prepayment, acceleration, declaration of default or otherwise, to the payment of the outstanding principal of the Note in accordance with the provisions of the Note; FIFTH: to the ratable payment to the Persons entitled thereto of all other obligations secured hereunder for which moneys have not theretofore been applied; and 20 21 SIXTH: at such time as all of the obligations of the Pledgors under the Note have been paid in full in cash or in stock in accordance with the terms of the Note and all other Secured Obligations have been paid or performed to the satisfaction of the Pledgee, the remainder, if any, will be paid over to Pledgors, their successors or assigns, or to whomsoever may be lawfully entitled to receive the same, as determined by a court of competent jurisdiction. 8.3 Purchase of Collateral by Pledgee. The Pledgee may be a purchaser of the Collateral or any part thereof or any interest therein at any sale or other disposition hereunder and may apply against the purchase price the indebtedness secured hereby. 8.4 Purchaser to Acquire Good Title. Any purchaser of the Collateral at any sale or other disposition thereof pursuant to this Section 8 will, upon any such purchase, acquire good title to the Collateral so purchased free of the lien and security interest created by this Agreement and free of all rights of equity or redemption in any Pledgor, which rights each Pledgor hereby expressly waives and releases to the full extent permitted by law, and each Pledgor will warrant and defend the title of such purchaser against all claims arising by, through or under the Pledgors. Nevertheless, if so requested by the Pledgee or any such purchaser, each Pledgor will ratify and confirm any exercise of remedies by the Pledgee hereunder by executing and delivering to the Pledgee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. In addition, each Pledgor will do or cause to be done all such other acts and things as may be reasonably necessary to make such exercise of remedies valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such exercise, all at such Pledgor's expense. 8.5 Sale of Pledged Stock or LLC Interest Without Registration. Pledgor recognizes that, under certain circumstances, (i) the Pledgee may be unable to effect a public sale of any or all of the Pledged Stock and/or the LLC Interest by reason of the Securities Act and applicable state or foreign securities laws or otherwise, but may be compelled to resort to one or more private sales thereof to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such property for their own account for investment and not with a view to the distribution or resale thereof and who otherwise satisfy the requirements of any such applicable law, and (ii) any such private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale. No such sale will be deemed to have been made in a commercially unreasonable manner for the reason that it was made as a private sale rather than a public sale, and the Pledgee will be under no obligation to delay a sale of any of the Pledged Stock and/or the LLC Interest for the period of time necessary to permit the registration of any securities for public sale under the Securities Act, or under applicable state securities laws, or otherwise comply with applicable law, even if the issuer thereof would agree or has agreed to do so and would be able to do so. 21 22 8.6 Appointment as Attorney-in-Fact. Each Pledgor hereby irrevocably constitutes and appoints the Pledgee, with full power of substitution, as such Pledgor's attorney-in-fact, with full irrevocable power and authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time in the Pledgee's discretion, to execute and deliver any and all bills of sale, assignments, instruments of title or other instruments which the Pledgee may deem necessary or advisable in its exercise of any of the remedies hereunder, and to take any other action to accomplish the purposes of this Agreement, including, without limitation, to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipt for moneys due and to become due under or in connection with the Collateral, to receive, endorse, and collect any drafts or other instruments, documents and chattel paper in connection therewith, and to file any claims or take any action or institute any proceedings which the Pledgee may deem to be necessary or desirable for the collection thereof, such Pledgor hereby ratifying and confirming all that such attorney or any substitute may lawfully do by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable. 8.7 No Waiver; Cumulative Remedies. No action or inaction of the Pledgee will be deemed to waive any of the rights, powers or remedies of the Pledgee hereunder except pursuant to a writing, signed by the Pledgee, and then only to the extent expressly set forth therein. A waiver by the Pledgee of any right, power or remedy on any one occasion will not bar the exercise of any right, power or remedy hereunder on any future occasion. No failure of the Pledgee to exercise nor delay of the Pledgee in exercising any right, power or remedy will preclude the exercise of any other right, power or remedy. If the Pledgee accepts payment of any amount secured hereby after its due date, it will not thereby be deemed to have waived its right to require prompt payment when due of all other amounts payable hereunder. Each right, power and remedy of the Pledgee provided for in this Agreement or now or hereafter existing at law or equity or by statute or otherwise is cumulative and concurrent and is in addition to every other such right, power or remedy of the Pledgee, and the exercise of any one or more of any such rights, powers or remedies with respect to any of the Collateral will not preclude the simultaneous or later exercise by the Pledgee of any other right, power or remedy with respect to any other Collateral. 8.8 Restoration of Rights and Remedies. If the Pledgee has instituted any proceeding to enforce any right, power or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, with or without notice to Pledgors, or has been determined adversely to the Pledgee, then and in every such case Pledgors and the Pledgee will be restored to their former positions hereunder, and thereafter all rights, powers and remedies of the Pledgee will continue as though no such proceeding had been instituted. SECTION 9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The covenants and agreements of each Pledgor set forth herein are primary obligations of such Pledgor. All such obligations are absolute and unconditional, are not subject to any counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension, deferment, reduction or defense (other than full and strict compliance by such 22 23 Pledgor with its obligations hereunder) based upon any claim any Pledgor, Covista, Capsule, Startec, Red Tulip or any other Person may have against the Pledgee or any other Person. All such obligations will remain in full force and effect without regard to, and will not be released, discharged or in any way affected by, any unenforceability, invalidity or other infirmity with respect to the Note, or any other circumstance, condition or occurrence whatsoever, whether foreseeable or unforeseeable and without regard to whether the Pledgee, any Pledgor, Covista, Capsule, Startec, Red Tulip or any other entity the capital stock of which (or an equivalent equity interest in which) has been pledged to Pledgee to secure the Borrowers' obligations under the Note shall have any knowledge or notice thereof. SECTION 10. MISCELLANEOUS. 10.1 Amendments, Etc. Any amendment, modification or waiver of any term or provision of this Agreement must be in writing and signed by the Pledgee. Any such waiver will be effective only in the specific instance and for the specific purpose for which it is given. 10.2 Pledgee to be Bound by Stock Restriction Agreements and Voting Agreements. The Pledgee agrees to execute and be bound by the Stock Restriction Agreements and the Voting Agreements entered into or to be entered into by and among Startec, a subsidiary of Startec, Anderson and Gold & Appel, in each case in form and substance substantially in accordance with drafts of such agreements provided to the Pledgee prior to the date hereof, to the extent that such agreements (i) place limitations for specified periods on the transfer of shares of Startec Stock or shares of Capsule stock, in each case which have been pledged to the Pledgee, or (ii) require during a specified period that votes cast with respect to shares of Capsule stock which have been pledged to the Pledgee be cast in favor of approval of the Merger Agreement and the Proposed Merger Transaction, in favor of any matter or transaction that is reasonably required to effect the merger and the other transactions contemplated by the Merger Agreement, or against any other acquisition proposal or matters which could reasonably be expected to facilitate any other acquisition proposal. 10.3 Survival of Agreements, Representations and Warranties. All agreements, representations and warranties contained in this Agreement or the Note or made in writing by or on behalf of any Pledgor in connection with the transactions contemplated by this Agreement or the Note will survive the execution and delivery of this Agreement, any investigation at any time made by or on behalf of the Pledgee, the purchase of any Note or any payment of any Note or any disposition of any Note. 10.4 Successors and Assigns. This Agreement is binding upon and will inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not. 10.5 Entire Agreement. This Agreement and the Note embody the entire agreement and 23 24 understanding between Pledgors and the Pledgee with respect to the transaction referred to herein and therein and supersede all prior agreements and understandings, written or oral, relating to the pledge of collateral to the Pledgee to secure the obligations of the Pledgors under the Note. 10.6 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction is, as to such jurisdiction, ineffective only to the extent made necessary by such prohibition or unenforceability. Any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable (i) the remaining provisions hereof or (ii) such provision in any other jurisdiction. There shall be substituted for any such provision so rendered ineffective a provision which, as far as legally possible, most nearly reflects the intent of the parties hereto. 10.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY OR THE SUBJECT MATTER OF ANY OF THE FOREGOING. 10.8 Agreement May Constitute Financing Statement. Each Pledgor consents to the filing of this Agreement or a photocopy thereof as a financing statement under the Uniform Commercial Code as in effect in any jurisdiction in which the Pledgee may determine such filing to be necessary or desirable. 10.9 Miscellaneous. This Agreement may be executed in any number of counterparts, each of which is an original, but all of which together constitute but one instrument. Except as otherwise indicated, references herein to any "Section" means a "Section" of this Agreement. The table of contents and the section headings in this Agreement are for purposes of reference only and shall not limit or define the meaning hereof. 10.10 GOVERNING LAW. THIS AGREEMENT AND (UNLESS OTHERWISE EXPRESSLY PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND ALL CONSENTS AND WAIVERS PURSUANT TO, THIS AGREEMENT WILL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. 10.11 Notices, Etc. All notices and other communications provided for hereunder must be in writing (including telegraphic, telex, telecopy or cable communication) and must be sent (a) if to any Pledgor, at its address listed on Exhibit B attached hereto, (b) if to Pledgee, at 450 Royal Palm Way, Suite 450, Palm Beach, FL 33480, Telephone: 561-655-7550, Facsimile: 561-655-9692, or (c) as to each party, at such other address as shall be designated by such party in a written notice to the other parties. All such notices and communications are effective when received. 24 25 10.12 Submission to Jurisdiction; Waiver of Immunity; Agent for Service of Process. For the purpose of assuring that the Pledgee may enforce its rights under this Agreement, each Pledgor, for itself and its successors and assigns, hereby irrevocably (a) agrees that any legal or equitable action, suit or proceeding against any Pledgor arising out of or relating to this Agreement or any transaction contemplated hereby or the subject matter of any of the foregoing may be instituted, at the election of the Pledgee, in any state or federal court in the Commonwealth of Virginia (including, without limitation, the U.S. Federal District Court for the Eastern District of Virginia) or in any state or federal court in the State of Florida, (b) waives any objection which it may now or hereafter have to the venue of any action, suit or proceeding, (c) irrevocably submits itself to the nonexclusive jurisdiction of any state or federal court of competent jurisdiction in the Commonwealth of Virginia or the State of Florida, and (d) irrevocably waives any immunity from jurisdiction to which it might otherwise be entitled in any such action, suit or proceeding which may be instituted in any state or federal court of the Commonwealth of Virginia or the State of Florida, and any immunity from the maintaining of an action against it to enforce any judgment for money obtained in any such action, suit or proceeding and, to the extent permitted by applicable law, any immunity from execution. Each Pledgor acknowledges that it has irrevocably designated and appointed CT Corporation System (or any successor corporation), at its office in Virginia and its office in Florida, as its authorized agent to accept and acknowledge on its behalf service of any and all process which may be served in any such action, suit or proceeding with respect to any matter as to which it has submitted to jurisdiction as set forth in this Section 10.11 and agrees that service upon such authorized agent shall be deemed in every respect service of process upon such Pledgor or its successors or assigns, and, to the extent permitted by applicable law, shall be taken and held to be valid personal service upon it. Each Pledgor will take all action necessary to ensure that such Pledgor shall at all times have an agent for service of process for the above purposes in the Commonwealth of Virginia and the State of Florida. This Section 10.11 does not affect the right of the Pledgee to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against any Pledgor in any jurisdiction. 25 26 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered personally or by their representative officers or agents duly authorized as of the date first above written. Pledgors: GOLD & APPEL TRANSFER, S.A. By: /s/ Walter C. Anderson --------------------------- Walter C. Anderson, Attorney-in-Fact REVISION LLC By: /s/ Walter C. Anderson --------------------------- Walter C. Anderson, Manager FOUNDATION FOR THE INTERNATIONAL NON-GOVERNMENTAL DEVELOPMENT OF SPACE By: /s/ Walter C. Anderson ---------------------------- Walter C. Anderson, President WALTER C. ANDERSON /s/ Walter C. Anderson ------------------------------ Walter C. Anderson ENTREE INTERNATIONAL LIMITED By: /s/ Walter C. Anderson --------------------------- Walter C. Anderson, President 26 27 Pledgee: DONALD A. BURNS /s/ Donald A. Burns ----------------------------- Donald A. Burns AGREED AND ACCEPTED (as to Sections 6.5 and 6.7 of the Agreement): COVISTA COMMUNICATIONS, INC. (formerly known as TOTAL-TEL USA COMMUNICATIONS, INC.) By: ------------------------------ Name: Title: AGREED AND ACCEPTED (as to Sections 6.5 and 6.8 of the Agreement): CAPSULE COMMUNICATIONS INC. By: ------------------------------ Name: Title: 27 28 Exhibit A SHARES: The Shares consist of: 1,179,732 shares of common stock of Covista owned of record and beneficially by Revision, and represented in certificated form by stock certificate number CU0008823 of Covista (the "Revision Shares"); 703,529 shares of common stock of Covista owned of record and beneficially by FINDS, and represented in certificated form by stock certificate number CU0008825 of Covista (the "FINDS Shares"); and 4,521,300 shares of common stock of Capsule owned of record and beneficially by Gold & Appel and represented in certificated form by stock certificate number 3012 of Capsule and 1,150,000 shares of common stock of Capsule owned of record and beneficially by Gold & Appel and represented in certificated form by stock certificate number 3010 of Capsule (collectively, the "Gold & Appel Shares"). (i) 5,889,032 shares of Series A preferred stock of Epoch owned of record and beneficially by Gold & Appel and represented in certificated form by stock certificate numbers 12 (884,955 shares), 18 (305,157 shares), 19 (4,424,779 shares) and 37 (274,141 shares) of Epoch, (ii) 882,353 shares of Series B preferred stock of Epoch owned of record and beneficially by Gold & Appel and represented in certificated form by stock certificate number PB-15, and (iii) 1,741,041 shares of common stock of Epoch, owned of record and beneficially by Gold & Appel and represented in certificated form by stock certificate numbers C-339 (313,102 shares), C-612 (700,000 shares) and C-613 (727,939 shares) of Epoch (all of the shares described in the preceding clauses (i), (ii) and (iii), collectively, the "Epoch Shares"). Any and all Demanded Shares pledged pursuant to Section 7.3. EXISTING PLEDGED SHARES - ----------------------- The Existing Pledged Shares consist of the Revision Shares and the FINDS Shares. NEWLY PLEDGED SHARES - -------------------- The Newly Pledged Shares consist of the Gold & Appel Shares. 29 Exhibit B NOTICE ADDRESSES FOR PLEDGORS The notice addresses for the respective Pledgors are as follows: (a) If to Gold & Appel: Omar Hodge Building Wickams Cay Road Town, Tortolla British Virgin Islands with copies to: Sean P. McGuinness Swidler Berlin Shereff Friedman, LLP 3000 K Street NW Washington, D.C. 20007-5116 Facsimile: 202-424-7643 and Walter C. Anderson Revision LLC 1023 31st Street, NW Suite 300 Washington, D.C. 20007 Facsimile: 202-736-5065 (b) If to Revision: Revision LLC 1023 31st Street, NW Suite 300 Washington, D.C. 20007 Attention: Walter C. Anderson Facsimile: 202-736-5065 with a copy to: Sean P. McGuinness Swidler Berlin Shereff Friedman, LLP 3000 K Street NW Washington, D.C. 20007-5116 Facsimile: 202-424-7643 30 (c) If to FINDS: 2000 L Street NW Suite 200 Washington, D.C. 20036 with copies to: Sean P. McGuinness Swidler Berlin Shereff Friedman, LLP 3000 K Street NW Washington, D.C. 20007-5116 Facsimile: 202-424-7643 and Walter C. Anderson Revision LLC 1023 31st Street, NW Suite 300 Washington, D.C. 20007 Facsimile: 202-736-5065 (d) If to Anderson: c/o Revision LLC 1023 31st Street, NW Suite 300 Washington, D.C. 20007 Attention: Walter C. Anderson Facsimile: 202-736-5065 with a copy to: Sean P. McGuinness Swidler Berlin Shereff Friedman, LLP 3000 K Street NW Washington, D.C. 20007-5116 Facsimile: 202-424-7643 (e) if to Entree International: 1023 31st Street, NW Suite 300 Washington, D.C. 20007 Attention: Walter C. Anderson Facsimile: 202-736-5065 ii 31 with a copy to: Sean P. McGuinness Swidler Berlin Shereff Friedman, LLP 3000 K Street NW Washington, D.C. 20007-5116 Facsimile: 202-424-764 iii EX-99.6 4 y46415bex99-6.txt LETTER AGREEMENT 1 Exhibit 6 Donald A. Burns 450 Royal Palm Way, Suite 450 Palm Beach, FL 33480 March 1, 2001 BY FACSIMILE AND FEDERAL EXPRESS - -------------------------------- Walter C. Anderson Revision LLC c/o Revision LLC 1023 31st Street, NW 1023 31st Street, NW Suite 300 Suite 300 Washington, D.C. 20007 Washington, D.C. 20007 Attention: Walter C. Anderson Gold & Appel Transfer, S.A. Omar Hodge Building Wickams Cay Road Town, Tortolla British Virgin Islands
Ladies and Gentlemen: Reference is made to (i) that certain Promissory Note, dated August 7, 2000, in the principal amount of $13,000,000.00, issued by Gold & Appel Transfer, S.A., Revision LLC and Walter C. Anderson, jointly and severally, in favor of me, Donald A. Burns (the "Note"), (ii) that certain Amended and Restated Stock Pledge Agreement (the "Pledge Agreement"), dated as of October 20, 2000, by and among each of you, Gold & Appel, Revision and Walter C. Anderson, Foundation for the International Non-governmental Development of Space (collectively, the "Pledgors"), and me, Donald A. Burns (the "Pledgee"). According to the terms of the Note, on the date hereof you, the borrowers under the Note, are obligated to repay the full principal amount of $13,000,000.00 plus accrued interest thereon of $1,310,400.00. As we have mutually agreed, the terms of such payments will be amended as follows: (i) accrued interest on the original principal 2 Walter C. Anderson 2 March 1, 2001 amount shall, on the date hereof, be added to the principal amount such that on the date hereof the principal amount of the Note shall be $14,310,400.00, and that going forward, interest shall accrue on such increased principal amount; (ii) a $3,000,000.00 installment payment of principal will be payable on March 31, 2001; and (iii) the remainder of the principal amount, and all interest accrued thereon, will be payable on December 31, 2001. Enclosed herewith is an Amended and Restated Promissory Note, dated as of March 1, 2001 (the "New Note"), reflecting the above amendments and certain other revisions, in the form mutually agreed upon by you and me. In addition, enclosed herewith is an Amended and Restated Pledge Agreement, also dated as of March 1, 2001 (the "New Pledge Agreement") reflecting the pledge of additional collateral pursuant to Section 7.3 of such agreement, the inclusion of an additional Pledgor and certain other revisions, also in the form mutually agreed upon by you and me. In case of any conflict between the terms of this letter agreement and either the New Note or the New Pledge Agreement, the terms of the New Note or the New Pledge Agreement, as the case may be, shall govern. By my signature on this letter, I hereby agree to the revised terms of your payment obligations, as described herein. In addition, I hereby acknowledge that, upon the due execution and delivery of the New Pledge Agreement and New Note by all of the parties thereto and the satisfaction by the Pledgors of all of their obligations thereunder, the default referred to in the Notice of Default, dated February 14, 2001, from me to each of the Pledgors as of such date shall be deemed cured. The foregoing acknowledgement does not constitute a waiver of any other defaults that may exist or arise or any other rights that I as Pledgee may have to take any action or seek any remedy permitted by the New Note, the New Pledge Agreement or applicable law. I plan to file any amendments required by law to the Schedules 13D previously filed by me in connection with this transaction. [The remainder of this page intentionally left blank.] 3 Walter C. Anderson 3 March 1, 2001 Would you please indicate your acceptance of the revised terms described herein by countersigning this letter and returning one copy of it, along with executed copies of the New Note and New Pledge Agreement, by fax and overnight mail to me, care of Melissa Sobel and Gary Murphy at Debevoise & Plimpton. You may keep the other copy of this letter for your records. Sincerely, /s/ Donald A. Burns Donald A. Burns Accepted and agreed: /s/ Walter C. Anderson ---------------------- Walter C. Anderson GOLD & APPEL TRANSFER, S.A. By: /s/ Walter C. Anderson -------------------------- Walter C. Anderson, Attorney-in-Fact REVISION LLC By: /s/ Walter C. Anderson ----------------------- Walter C. Anderson, Manager -----END PRIVACY-ENHANCED MESSAGE-----